Barbara operates a sporting goods store. She uses the cash method and treats inventory as non-incidental supplies. At the beginning of the year, she had inventory of $26,000. She purchased $470,000 of goods during the year. Her ending inventory was $42,000. She makes sure to pay all of her suppliers by the last day of her tax year. What is Barbara's inventory deduction for the year?

Question

Quizplus · Accepted Answer

Barbara's inventory deduction for the year can be calculated as follows:

Beginning inventory + Purchases - Ending inventory = Cost of goods sold
$26,000 + $470,000 - $42,000 = $454,000

Therefore, Barbara's inventory deduction for the year is $454,000. Option B is the correct answer.

Barbara Operates a Sporting Goods Store